Ramaphosa, Putin ‘touch on’ Brics summit during phone call:
President Cyril Ramaphosa and Russian president Vladimir Putin have “touched on” preparations for next month’s Russian-Africa summit and the Brics leadership summit set for Johannesburg in August, during a phone call.
This was according to a statement released by the Ministry of Foreign Affairs of Russia (MFA) late on Wednesday night.
“Issues related to the well-known African initiative to find ways to resolve the Ukrainian conflict were also discussed, and it was agreed that Vladimir Putin would soon receive a delegation of a number of African heads of state,” said the MFA.
The statement comes as South Africa grapples with having Putin attend the August leadership summit, despite the International Criminal Court (ICC) in March having issued a warrant for his arrest.
The ICC alleges that Putin is responsible for the unlawful deportation and transfer of children from occupied areas of Ukraine to Russia – a war crime – since 24 February 2022, the day Russia invaded Ukraine.
The African presidential peace delegation that will be visiting Russia and Ukraine this month comprises Ramaphosa, Abdel Fattah el-Sissi of Egypt, Kaikande Hichilema of Zambia, Yoweri Museveni of Uganda, Denis Sassou-Nguesso of the Republic of the Congo, and Macky Sall of Senegal.
On Monday during a press briefing in Pretoria, Ramaphosa said the African leaders would engage with Putin and Ukrainian president Volodymyr Zelenskyy about “the elements for a ceasefire and a lasting peace in the region”.
The “peace mission” is set for mid-June.
Having Putin attend the Brics leadership summit in August in South Africa – which is a signatory to the ICC’s Rome Statute – has cast a shadow over relations between South Africa and trading partners the United States and European Union, who remain unconvinced that Putin’s attendance is acceptable because of South Africa’s “non-aligned” stance in the Russia-Ukraine war.
Tensions have also been heightened by the United States ambassador to South Africa, Reuben Brigety, alleging last month that weapons and ammunition had been loaded onto the sanctioned Russian vessel, the Lady R, when it was docked in Simons Town in December.
While the African National Congress and government have denied the allegations and said Brigety has apologised for the remarks, he has not. Instead, he mentioned that the manner in which he made the allegations – at a press briefing instead of going through prescribed channels – was inappropriate.
Ramaphosa has tasked a three-member “independent” panel chaired by retired judge Phineas Mojapelo to “enquire into the circumstances of the docking” of the Lady R. The presidency has cited national security to justify not releasing the terms of reference for the inquiry.
According to the MFA, Putin also spoke to Turkish president Recep Erdogan over the phone.
In that call, “Vladimir Putin stated that the Kiev authorities, at the suggestion of their Western handlers, were still making a dangerous bet on the escalation of hostilities, committing war crimes, openly using terrorism methods and organising sabotage on Russian territory. A clear example of this was the barbaric action to destroy the Kakhovskaya hydroelectric power station in the Kherson Region, which resulted in a large environmental and humanitarian catastrophe”.
Ramaphosa’s spokesperson, Vincent Magwenya, told the Mail & Guardian that the presidency would be issuing a statement about the phone call between Ramaphosa and Putin in due course.
Eskom blows its diesel budget but treasury tightens purse strings:
Eskom will have to look for money to buy more diesel because the treasury will not advance it more funding than it already has.
This comes as the power utility has overspent its diesel budget of R8 billion, according to Electricity Minister Kgosientsho Rampokgopa. In April, the minister said Eskom would spend R30 billion on diesel to keep the lights on — the bulk of which (R22 billion) would come from treasury’s debt relief.
But the treasury told the Mail & Guardian that although Ramokgopa says he plans to use some of the debt relief money to buy diesel, this is not possible.
The treasury would have to make a separate concession for the diesel funding, but it was not prepared to do so.
“It is not the treasury’s practice to provide ad hoc funding for Eskom … money given to particular departments or state companies is governed by the Public Finance Management Act, which sets out the process for funding requests,” the treasury said.
“These funding requests must come before the national budget is tabled to be considered, and then be approved or not, by parliament. The national treasury has not yet considered any additional funding from Eskom.”
In his February budget speech, Finance Minister Enoch Godongwana proposed that the government take over R254 billion of Eskom’s debt to enable the utility to catch up on maintenance programmes and have a financial break.
The treasury said the Eskom Debt Relief Bill was debated in the National Assembly and will today be debated by the select committee on appropriations in the National Council of Provinces. Only after that process can it be enacted.
Ramokgopa told the M&G that despite extensive consultations for the utility’s winter plan, Eskom had already depleted its emergency diesel budget to alleviate load-shedding.
Eskom uses diesel-fuelled open-cycle gas turbines in emergencies. Rampokgopa said the cost of diesel had to be weighed against the cost of higher stages of load-shedding to the economy.
The treasury’s deputy director general of public finance, Mampho Modise last week in parliament said Eskom’s financial situation continued to deteriorate despite fiscal support because the utility seemed to be acting with impunity and continued to pass high costs to the end users.
He said any financial assistance without addressing structural and governance problems, corruption and malfeasance, inefficiencies and industry-wide issues would do little to turn around Eskom.
Energy specialist Tshepo Kgadima said Eskom’s dependency on diesel was financially ruinous to Eskom.
“It is apparent that Eskom management is somewhat oblivious to the fact that open cycle gas turbines were never designed to be operated as baseload power plants and therefore at the current extreme rate of usage, these open cycle gas turbines are soon going to experience technical breakdowns.”
He added: “If Eskom’s preliminary unaudited financial results for the end of March 2023 are anything to go by, I am afraid the proverbial light at the end of South Africa’s economic tunnel is that of an oncoming high speed train.”
Municipalities owe money
Eskom says it has been unable to cover its financial losses because municipalities have failed to pay it for electricity used. Municipalities owe Eskom about R56 billion in total.
It hopes to recover some of its money through the 18.65% tariff increase granted by Nersa.
In the first six months of last year, Eskom had spent double its budget of R2 billion.
The high cost of using the gas turbines during load-shedding was one of the factors considered by Nersa in January when it granted Eskom the tariff increase for 2023-24.
Last week during a media briefing, Ramokgopa said the Eskom board did not have an estimate yet of how much additional funding it would need as it ramps up the use of the open-cycle gas turbines to prevent load-shedding from escalating beyond stage six.
“We are working on what that amount is, but if we cannot get additional funding that would mean additional load-shedding,” he said.
“The budget available for the Eskom open-cycle gas turbines for the 2023-24 financial year is R19.6 billion, including independent power producers OCGT [open cycle gas turbines] spend.
“The year-to-date spend for the 2023-24 financial year, as of May 8, 2023, is R3 billion,” he said.
As part of its plan to reduce the level of load-shedding this winter, Eskom said it will run the gas turbines at a load factor of 20% over the winter months, contributing roughly 500 to 600 megawatts to the grid.
Mandisa Nyathi is a climate reporting fellow, funded by the Open Society Foundation for South Africa
Eskom’s partial exemption from irregular expenditure denied:
Finance minister Enoch Godongwana has declined the controversial application by Eskom for a partial exemption from the Public Finance Management Act (PFMA).
The decision comes after extensive consultations with the auditor general as well as Eskom’s auditors, Godongwana said on Tuesday in a statement.
Auditor general Tsakane Maluleke objected to the exemption granted to Eskom last month which would exempt the utility from an audit by the Auditor-General of South Africa (AGSA), lessening the possibility of a qualified audit for non-compliance with the PFMA.
All government institutions are required by law to report irregular as well as fruitless and wasteful expenditure in their annual report and annual financial statements.
Eskom had asked for a partial exemption from disclosing irregular, fruitless and wasteful expenditure and material losses from criminal conduct in its annual financial statements as it is attempting to recover from reputational damage and managing internal corruption.
The utility, which is still looking for a new chief executive officer, has been plagued with corruption allegations that have left it unable to meet electricity demand in the country. Its debt of more than R400 billion has been labelled as the biggest financial risk currently facing South Africa.
An exemption was requested by Eskom board chairperson Mpho Makwana in a letter dated 9 March.
On Tuesday, Godongwana said although he recognised the utility’s commitment to expose fraud and corruption, and the additional compliance and reporting burdens facing Eskom and other state-owned entities (SOEs), he was of the view that “Eskom needs to do more operationally to reduce the scope of fraud and corruption before such exemption can be considered, and for it to be effective”.
Godongwana said: “Eskom attempts to recover from the devastating impact of state capture, and take steps against past and current corruption. It needs to ensure that its anti-corruption strategy is credible and has the support of key stakeholders like investors, lenders, suppliers, customers and the public.”
The decision is an about-turn from the minister, who in April had granted the partial exemption through a gazetted notice, which caused a public outcry.
On Tuesday, Godongwana said the decision to deny Eskom the partial exemption follows 56 public comments covering a broad spectrum of accounting and reporting, auditing, governance, legal principles and public interest issues have been duly considered.
He added that treasury also engaged with audit firms, professional auditing and accounting bodies, a rating agency and other relevant authorities who emphasised that, as part of the Eskom debt relief arrangement, the minister of finance has instituted additional reporting obligations on Eskom, which the entity will be required to submit to parliament and oversight structures.
“The extensive PFMA reporting requirements makes it more onerous for a state-owned entity compared to a listed company to have its financial statements qualified, even when there is no financial mismanagement or corruption,” he said.
In February, Godongwana announced that the government would take over R254 billion of Eskom’s loans into its balance sheet as the utility struggled to earn enough to service its debt and running costs.
The treasury granted a similar exemption to Transnet for the financial years of 2021-2022 until 2023-2024. Transnet, which is also struggling to make ends meet, was granted an exemption from disclosing any losses arising from criminal conduct and irregular, fruitless, and wasteful expenditure.
In April, the Mail & Guardian reported that Godongwana acknowledged the public’s outcry over Eskom’s exemption, but insisted that it was not granted to allow Eskom to conceal corruption. Instead it would further protect the fiscus.
“We had to ask ourselves the question: If Eskom’s financial statements are being constrained by these irregularities, what are the implications for Eskom’s cost of capital? If they cannot raise that capital, what are the implications for the fiscus? So we look at it from a fiscal sustainability eye,” Godongwana said.
The Organisation Undoing Tax Abuse (Outa) welcomed the decision as a positive action by the treasury.
“We believe the treasury and the minister took civil society’s concerns to heart and made an informed decision,” they said.
Energy specialist Tshepo Kgadima said according to the PFMA rules, the treasury could not give Eskom the exemption because the utility is not financially stable enough to meet its obligations and continue its business for the foreseeable future.
“Granting the exemption would enable Eskom’s bond holders to enjoy the benefits of cooking the books without accountability. The auditor general would not trust the numbers that they see. Eskom’s request was a feeble attempt to stay clear of being in dereliction of its duty to report its finances,” he said.
Eskom has not responded to numerous requests for comment.
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